Mortgage Insurance Calculator

How Much Does Mortgage Life Insurance Cost?

As with Mortgage Payment Protection, the cost of Mortgage Life Insurance is calculated based on various factors, including:

• The amount of insurance required for your mortgage
  The more cover you need, the more a mortgage Life Insurance plan will cost
• How long you need the cover for
  The longer you need the policy for, the older you’ll be when it ends and the higher the risk you present to the insurer
• Whether you choose a Level or Decreasing policy
  With level cover, the benefit the insurer must pay remains fixed for the life of the policy and so the risk is the same in the first year as it is in the last, so the price tends to be higher
• Your smoker status
  Mortgage Life Insurance is more expensive if you’re a smoker as there’s a higher risk of you passing away prematurely
• Your medical history
  Your medical history is relevant as serious conditions need to be taken into account and may result in a policy loading or a full exclusion on death from that condition or related causes
• Whether you want Joint or Individual cover
  Adding a partner to your Mortgage Life Insurance policy ensures you’ll receive a payout if either one of you passes away.

Think carefully if you’re looking into Joint Mortgage Life Insurance. These policies only trigger a payout on the first death and then terminate leaving the surviving partner with no life insurance.

Two single policies maybe better than a joint plan

With Life Insurance on a ‘joint life first death’ basis, the most commonly-used insurance, the surviving partner is left without Life Insurance on the first couple’s death. At that point in their life, it may be expensive for them to get re-covered due to their age and any medical conditions they’ve suffered in the interim.

As such, two single Life Insurance policies may be a better option for couples and usually only costs a few pounds more to potentially secure double the payout from the outset.

Example Mortgage Life Insurance Costs

With most property purchases being on a joint basis we have calculated example mortgage life insurance costs for a couple buying a home together who opt for a 25 year repayment mortgage. We’ve assumed:

• They are healthy.
• Neither of them smoke
• They both work in administrative roles in an office environment
• They require £250,000 of Decreasing Life Insurance over 25 years.

How Much Does Mortgage Payment Protection Insurance Cost?

The cost of Mortgage PPI will depend on a variety of factors. Our Mortgage Payment Protection Insurance Calculator takes into account:

• Your age
  The older you are, the greater the risk you present to the insurer
• How long you need the cover for
  Similarly, the longer you need the cover for the older you’ll be when the policy ends and the greater the risk you pose to the insurer
• Your deferred period
  How long you’ll wait before the cover will kick in (the longer you can wait, the lower the cost of the cover)
• Your smoker status
  Smokers are at higher risk of dying early of cancer, heart disease and stroke etc.
• Your occupation
  Riskier occupations (e.g. manual ones, particularly those involving heavy machinery or work in dangerous places) will generally attract higher premiums.

Mortgage Payment Protection is only a short-term solution. It provides cover for an absolute maximum of 24 months per eligible claim, at which point payment will cease. If you develop a long-term illness or injury this would not likely be adequate.

This is especially true given the length of the average mortgage is increasing as buyers look to make purchasing a home more affordable in an era of rising house prices.

Given this, many people are worried that the short-term nature of Mortgage Payment Protection won’t cover them if they’re off work long-term, especially when a mortgage loan can now stretch for 30 years or more.

Long-Term Mortgage Protection

For those wanting to protect their income (and therefore protect their mortgage repayments) over a longer period, a long-term Income Protection plan could well be a better option.

Income Protection replaces your earnings if accident or sickness stops you working. Although not specifically linked to your mortgage, you can then use this benefit to keep up with your mortgage payments and any other expenses.

The best Income Protection policies are long-term, with a cease age set at your retirement age. That means if you took out a plan and fell sick tomorrow, if your claim was valid you’d be paid a monthly income right up to the date you retired.

That would allow you to maintain your mortgage repayments over many years, rather than the maximum of 24 months offered by MPPI.

Advantages of Income Protection

• The best Income Protection offers a superior definition of incapacity
  ‘Own occupation‘ Income Protection pays out if you can’t do your own specific job, whereas MPPI may use a lower definition of incapacity that makes it harder to claim
• Long-term cover
  Income Protection can last until a policy cease age, which is often aligned with your retirement age, potentially securing your income for decades if you can’t work ever again rather than the short-term nature of MPPI
• Chance to fix premiums from the outset of the policy
  With Income Protection, premiums can be guaranteed over the life of the plan. MPPI tends to (although not always) have reviewable premiums, which can increase considerably year on year
• Medical underwriting 
  Your medical history is examined with Income Protection so you know what you’re covered for at the outset and your health is assessed at the start.

Example Mortgage Payment Protection Costs

Given the main factors impacting on the cost of illness insurance is your current health, your age, your job role and the level of cover you require we have calculated some example costs based on a typical office worker as per below:

• They have no existing health conditions
• They don’t smoke
• They work in an office
• They need a 4 week deferred period
• They require £1,000 per month of cover to protect their mortgage

Calculating your Mortgage Protection Insurance

With something as important as your mortgage it’s essential you understand what you’re buying. It could be an expensive policy to get wrong! We here to help you make an informed decision and ensure you can accurately calculate the cost of your mortgage insurance when considering your options.

Why Speak to Us…

We started Drewberry because we were tired of being treated like a number and not getting the service we all deserve when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to talk to us.

• There is no fee for our service
• We are independent and impartial
  Drewberry isn’t tied to any insurance company, so we can provide completely impartial advice to make sure you get the most appropriate policy based solely on your needs.
• We’ve got bargaining power on our side
  This allows us to negotiate better premiums for you than you going direct yourself.
• You’ll speak to a dedicated expert from start to finish
  You will speak to a named expert with a direct telephone and email. No more automated machines and no more being sent from pillar to post – you’ll have someone to speak to who knows you.
• Benefit from our 5-star service
  We pride ourselves on providing a 5-star service, as can be seen from our 2872 and growing independent client reviews rating us at 4.92 / 5.
• Gain the protection of regulated advice
  You are protected. Where we provide a regulated advice service we are responsible for the policy we set-up for you. Doing it yourself or going direct to an insurer won’t provide this protection, so you won’t benefit from these securities.
• Claims support when you need it the most
  You have support should you need to make a claim. The most important thing when it comes to insurance is that claims are paid and quickly. We are here to support you during the claims process and make sure it’s as smooth and stress free as possible.

Our online Mortgage Insurance calculator does most of the heavy lifting for you, but getting mortgage protection quotes is only half the battle.

If you need some help please do not hesitate to pop us a call on 02084327333 or email help@drewberry.co.uk.

Rob Harvey
Independent Protection Expert at Drewberry